Loan Modification in Los Angeles

Oaktree Law - Staying in Your Home; Los Angeles Foreclosure Lawyer

Foreclosure Attorneys Serving Los Angeles & Orange County

If you are having difficulty paying your mortgage, or the amount you owe on your mortgage is more than value of your home, you’re not alone. With so many poorly underwritten mortgages out there, many lenders’ claims can now be challenged in court.

Dedicated Los Angeles Foreclosure Attorneys

A loan modification can offer significant relief for homeowners by lowering their monthly payments. But the paperwork is often extensive and confusing, and lenders have many justifications to deny your application.

The difference between negotiating with your lender alone and employing a loan modification attorney is dramatic. Lenders prefer that you apply without legal representation because you’re less likely to understand all of your rights or to have the experience to complete the paperwork fully.

The Loan Modification Process

At Oaktree Law, our Los Angeles foreclosure attorneys have negotiated thousands of loan modifications and can guide you through the entire process of home loan modification. We start with our evaluation, which will identify whether you are a good candidate for a loan modification. If you are a good candidate, our loan modification attorneys will evaluate your current mortgage and the challenges you face, ensure that your hardship is documented accurately, the paperwork is complete, and that the new terms of your mortgage ensure long-term debt relief.

Upon approval, we will negotiate with your mortgage holder to secure manageable payments and true debt reduction so that you can keep your home. If you do not qualify, we will work with you on other options to resolve your debt difficulties

Common Loan Modification Questions

WHAT IS A LOAN MODIFICATION? 

A loan modification is a change in the terms of your existing mortgage with your bank. The purpose of a modification is to significantly lower your monthly payments, either temporarily or permanently.

HOW MUCH CAN I SAVE BY DOING A LOAN MODIFICATION?

It’s possible to save hundreds or thousands a month. The length of a typical mortgage loan is 30 years. A loan modification that saves you $500 a month can equal $180,000 over the life of the loan.

WHO QUALIFIES FOR A HOME LOAN MODIFICATION?

Homeowners who are struggling to pay their mortgages should look into loan modification as an option. Homeowners have the best chance of obtaining a loan modification if:

  • They have an adjustable-rate mortgage
  • Their mortgage has a high interest rate
  • The amount remaining on the mortgage is more than the property is worth
  • They are experiencing another kind of financial hardship

WHAT ARE THE BENEFITS OF A LOAN MODIFICATION?

A loan modification can reduce your interest rate or result in a longer term for the loan. Another possibility is a balloon payment. Part of your loan, even a large portion of it, can be shifted to the end of the loan term to ease the financial burden now. In fact, you may save hundreds, or thousands, of dollars per month. Assuming the typical mortgage has a 30-year term, modifying it can save homeowner’s $500 a month, or as much as $180,000 over the entire term.

Modification is intended to prevent foreclosure. Despite your financial hardship and possible defaulting on payment, you will be able to remain in your home. Denial is often the fault of the lender, but taking responsibility for the matter can help because you may be looked upon more favorably by the lender. If you’re willing to follow their rules, it may be easier to achieve a successful modification.

WHY WILL IT WORK FOR ME? 

The government has asked for ALL lending banks to help alleviate the foreclosure epidemic and modify mortgages for troubled homeowners. An Orange County loan modification attorney from Oaktree Law can help ensure that you get the best terms available from your lender.

CAN I OBTAIN A HOME LOAN MODIFICATION IF MY CREDIT IS BAD?

A loan modification is not based on credit. The banks are trying to turn a troubled loan that the homeowner is unable to pay into a good loan that the homeowner can ultimately repay.

WHAT IF MY INCOME IS TOO LOW?

The pre-qualification evaluation we conduct at Oaktree Law with all of our new clients will determine whether you will be able to do so before we begin the loan modification process. If you do not qualify for a loan modification or if you have been unfairly denied a loan modification in the past, we can help you with additional alternatives.

DOES EVERY BANK DO LOAN MODIFICATIONS?

Almost all banks do. Given the current housing crisis, in our experience, banks are willing to work with clients to help save their homes.

HOW DOES THE BAIL OUT BILL AFFECT MY CHANCES OF GETTING A LOAN MODIFICATION?

The government has instructed banks that they need to do their part to help fix the housing crisis. The Bail Out Bill will only help your chances of getting a loan modification.

WHAT SHOULD I DO IF I HAVE BEEN DECLINED FOR A LOAN MODIFICATION BY MY BANK?

The California Homeowner Bill of Rights, passed in 2013, holds lenders responsible for their actions. If you requested a loan modification and were declined, there’s a chance the lender didn’t adequately review your application. We can determine if the lender missed anything or didn’t consider appropriate details such as your income. It’s therefore important to have a Los Angeles loan modification attorney on your side who knows how to work with lenders.

If the process was inaccurate, we can determine just what happened, so your modification request receives a fair and honest review. At Oaktree Law, we know this is actually quite rare in the industry, after working with many clients over the years. A fair, honest loan modification review, however, is possible, even if it means filing a lawsuit against the lender.

CAN I APPLY FOR A LOAN MODIFICATION FOR MY SECOND MORTGAGE?

Yes. If your first mortgage has already been modified, the federal Home Affordable Modification Program (HAMP) permits home loan modification for your second mortgage. The government provides incentives for participating lenders willing to modify or even forgive one. Even if a lender doesn’t participate in the program, modifications may still be allowed. It all depends on the individual lender’s policies. The basic qualifications for the government program include:

  • The house in question is a primary residence.
  • The mortgage started prior to January 1, 2009.
  • Payment must exceed 31 percent of the borrower’s income.
  • The loan amount is $729,750 or less.
  • Documentation of the hardship preventing you from paying.

Your mortgage payments may also be modified temporarily, if you are unemployed, under the HAMP program. However, you shouldn’t attempt to modify a second mortgage alone. Our loan modification attorneys in Los Angels can help negotiate on your behalf.

WHAT IF MY HOUSE WAS SOLD WHILE IW AS IN A LOAN MODIFICATION REVIEW?

Lenders have a process called dual tracking, which is illegal in California. It’s a common scenario that a lender sells a home while reviewing a home for a mortgage loan modification. Lenders have even moved forward with foreclosure while a review is ongoing. If you receive a notice of default or a notice of sale, you then have a right to sue the lending company.

Oaktree Law can help borrowers by putting pressure on the lender to reverse the sale, so ownership is reverted back to you. We can take things a step further by forcing the lender to pay for damages. These include statutory and penalty damages, and our team can help you recover substantial amounts of money if a lender has foreclosed or sold your property during the loan modification process or related negotiations.

WHAT INFORMATION DO I NEED TO QUALIFY FOR A LOAN MODIFICATION?

Most borrowers with primary residences, investment properties, and commercial properties qualify for a mortgage modification. To prove you qualify, you’ll need various types of documentation. Our Los Angeles bankruptcy attorneys can help put together everything you need, and will be on your side if a lender has declined your request. If this has been done so wrongfully, we can file a lawsuit against the lender to force them into a favorable modification. To start, however, you will need to submit pertinent information such as:

  • Proof of income
  • Proof of supplementary sources of income
  • Utility bills and other proof of residency
  • Recent bank statements
  • Tax returns
  • A letter explaining your situation of hardship

Lenders should take a hard look at situations such as loss of employment/income, divorce, job relocation, or a death in the family. Military service, illness, and medical bills are other factors that may qualify you for a loan modification.

WHAT IF A LENDER DOES NOT WANT TO GRANT ME A LOAN MODIFICATION?

A lender may use any excuse to deny your request. You may be months or a year behind on payments, and know a reduction will make it more affordable to make your payments on time. California law requires lenders to work with you in such a situation. However, many times they may not review a borrower’s request. There’s not much to do if you aren’t receiving any income, but in most cases an attorney can file a lawsuit and give you some traction in reaching a settlement.

If your lender says no and it seems like you’re not getting a fair review, get a Los Angeles loan modification attorney on your side. We may be able to get your payments reduced or re-capitalize back payments onto the loans’ principal. Your attorney will do what it takes, so long as you’re earning income and willing to settle on a solution that helps you get back on track with payments.

CAN A LOAN MODIFICATION STOP MY HOME FORECLOSURE?

Homeowners often believe they can’t do anything if they’re delinquent on mortgage payments or a lender has scheduled a foreclosure sale. You have the power to prevent foreclosure, especially with the help of an attorney. An attorney can negotiate with the lender to work out an agreement. Options include Chapter 7 bankruptcy, which can eliminate many or all unsecured debts, or Chapter 13 bankruptcy, which can be used to stretch payments and pay out past due amounts over time.

If you prefer not to retain a Los Angeles bankruptcy lawyer, your attorney can help you find alternatives such as loan modification. Reduced payments and interest rates can ease the situation, so you can make payments and protect your home. Once you’re able to resume paying your mortgage, the threat of foreclosure should pass. Having an attorney on your side will make sure the lender is on the same page and you get the fair treatment you deserve.

CAN I APPLY FOR A LOAN MODIFICATION IF I AM BEHIND ON MY MORTGAGE PAYMENTS?

There are options to help you pay past due amounts. Applying for a modification may be easier if you have good credit and have the financial means to manage payments under the new terms. Nonetheless, difficulty making payments doesn’t always affect eligibility for a modification to your home loan. Assuming you remain in good standing with your contract with the lender, they may be willing to change the terms. If you feel they’re not acting in your best interests, your attorney will help with the application process or if you have been denied.

HOW LONG WILL IT TAKE FOR ME TO RENEGOTIATE MY HOME MORTGAGE WITH A LOAN MODIFICATION?

The length of time it takes to secure a mortgage loan modification depends on the lender and the circumstances of your financial hardship. It should take about 60 to 90 days. A lender with a high workload may take 120 days and it is becoming more commonplace to see the renegotiation process exceed four months. During the review process, a lender may inspect the physical conditions inside your home for any signs you’ll have trouble committing to modified payments. Our attorneys are familiar with the negotiation process and can represent you on your behalf, so no details are missed and renegotiation is more likely to go in your favor.

WHAT IS HAMP?

The Home Affordable Modification Program (HAMP), introduced in March 2009, was designed for homeowners struggling with their monthly mortgage payments and at risk of foreclosure. Modifying one’s mortgage terms, HAMP helped lower monthly payments, so homeowners would be less likely to default on their loan. The program was part of the Making Home Affordable program; it was available to homeowners who’s mortgage was owned by Fannie Mae or Freddie Mac. This program was closed on December 31, 2016, but there’s another option for borrowers to consider, which can also help manage their payments during a time of financial difficulty.

To qualify, homeowners had to pay more than 31 percent of their gross income towards principal, property taxes, interest, insurance, and HOA dues as well as other housing payments. A HAMP home modification also required a significant reduction in income, increase in expenses beyond the borrower’s control, or other documentable financial hardships for one to qualify for a trial modification, on the path to a permanent loan modification.

WHAT IS HARP?

The Home Affordable Refinance Program also helps homeowners avoid foreclosure. It was announced in 2009 after the HAMP program was closed, as part of an effort to stabilize the housing market and help homeowners manage their monthly payments. To qualify, one must be current on their mortgage payments. Other reasons must affect their eligibility to refinance mortgage. For example, one who owes more on the mortgage than the value of their home, or whose income has been reduced, may qualify.

If you are eligible, you could refinance at the current mortgage rates. HARP is similar to conventional refinancing. It requires an underwriting process, while you can refinance your mortgage at a lower interest rate if the loan disclosures and financial documentation you provide reveal you are eligible. You can seek a HARP refinance even if you’re not behind on mortgage payments.

WHAT IS THE DIFFERENCE BETWEEN HAMP AND HARP?

The main difference between the two is that HAMP was aimed at people who had trouble making their monthly payments, while HARP targets those who are looking to refinance their mortgage but have remained current on their payments. Both require the borrower to have a Fannie Mae or Freddie Mac owned mortgage. A modification to the existing loan, HAMP helped homeowners avoid foreclosure. The HARP program closes out the old mortgage and refinances the loan at the lowest available mortgage rates. You get a brand new mortgage, which requires up-to-date payments and sound credit. In most cases, you cannot re-apply under HARP if your mortgage has been refinanced under the same program, and a HARP refinance after January 1, 2009 disqualifies you for receiving a HAMP modification.

IS HAMP OR HARP RIGHT FOR ME?

It depends on your situation. If you’re looking for a mortgage modification and your financial situation prohibits you from making monthly payments, the HAMP program offered a solution. Remember you won’t be eligible if your mortgage payments are less than 31 percent of your gross income. If you’re under water but managing to pay your monthly premiums, HARP offers a solution similar to refinancing, especially if obtaining traditional refinancing is difficult due to a decrease in your home’s value. While the HARP program expires December 31, 2018, a replacement program is in the works and is expected to have fewer restrictions.

CAN I APPLY FOR A LOAN MODIFICATION IF I AM UNEMPLOYED?

You may be eligible under the Federal Home Affordable Unemployment Program, or HAUP. If you qualify, your mortgage payments may be temporarily reduced, or you may receive a forbearance, for a minimum of three months. Other programs require you to be able to make payments or have an income stream, even if it is limited. A home loan modification may be possible under HAUP if you have lost your job and haven’t been able to find additional employment. Your attorney is familiar with the options available and can review your situation to see what assistance you may be eligible for.

WHAT OTHER OPTIONS DO I HAVE BESIDES LOAN MODIFICATION?

Loan modification isn’t your only option if you’re struggling to pay a mortgage. Some of your options may include:

  • Repayment or forbearance plans offered by your lender.
  • Switching from an interest-only or adjustable-rate mortgage to a fixed-rate mortgage.
  • Short sale, or when a property is sold below the balance you owe.
  • Deed in lieu of foreclosure (Cash for Keys), in which you deed your property in exchange for a release from all mortgage obligations.

Your loan modification attorney will go over all the available options, and provide representation in pursuing the solution that works best for your situation. Lenders often seem inflexible. That’s where an attorney can help; our experience and credibility can improve your relationship with your lender, so we can arrive at a solution that works for everybody.

At first, you could try working with the lender directly. They’re looking to get paid, even if the payments are lower. Sometimes they might waive fees, extend the contract terms, refinance your loan, or negotiate a lower interest rate.

WHY SHOULD I HIRE A LAWYER TO FILE FOR A LOAN MODIFICATION?

The credibility of an attorney is one reason. Also, lending and refinancing processes are complex, so working with a lawyer experienced with mortgage loan modification helps. Since the process can be quite confusing, the representation of an attorney is important because we have the knowledge and experience to work and negotiate with lenders. There’s less of a chance the lender can take advantage of your lack of understanding.

A Los Angeles loan modification attorney from Oaktree Law can provide invaluable advice. Homeowners have been offered deals from companies looking to buy houses at deep discounts. Accepting such deals not just shortchanges them, but also doesn’t resolve many of their financial issues. At OakTree Law, we can save your house and prevent you from going into foreclosure or bankruptcy.

With a lawyer’s help, a lender can be forced to properly review your request for a home loan modification.

If you are at risk of default on your mortgage, contact us or call 800-535-1627 to speak to an experienced Orange County loan modification attorney.